Market Snapshot, Noon CT (VIP) -- August 1, 2013

August 1, 2013 07:06 AM
 

Corn futures are trading mostly 10 to 13 cents lower ahead of this afternoon.

  • Traders continue to keep a negative focus as they start a new trading month.
  • They view weather forecasts calling for below-normal temps and increased chances for precipitation through the first half of August as positive for pollination. Thus, their estimates of the size of the potential new-crop harvest are rising as they shrug off concerns of the late-developing crop and holes in the western Corn Belt.
  • Traders also continue to ignore this morning's National Drought Monitor, which shows expansion of drought in Iowa to include all but the eastern portion of the state.
  • The market shrugged off the positive export news announced by USDA today. This morning's weekly export sales data showed new-crop purchases of 1,091,200 MT, which was well above expectations. In addition, USDA announced weekly old-crop sales of 134,000 MT.
  • The International Grains Council today announced it had reduced its projection of the size of the global 2013-14 corn production by 4 MMT due to weather concerns in the U.S. but traders are focused on the Council's call for a 10% increase in total global production.
  • Gulf basis is 5 cents stronger for first-half August delivery, unchanged for last-half August through September, a penny lower for October, unchanged for November and 5 cents lower for December delivery. This follows a 20-cent rise in the Gulf corn basis for immediate delivery earlier this morning.

 

August soybean futures are 9 cents lower and deferred futures are mostly 12 to 17 cents lower.

  • Traders view weather forecasts as favorable for the growing crop and are pressing new-crop futures lower as their concerns over crop conditions decline with each day of cooler-than-normal temperatures.
  • Traders are shrugging off this morning's National Drought Monitor which shows expansion of drought in Iowa to include all but the eastern portion of the state.
  • News the International Grains Council projects the global soybean crop to expand by 6% in 2013-14 to an all-time high is adding to selling pressure.
  • Traders are shrugging off the pickup in export demand due to the drop in new-crop prices. USDA reported weekly export sales of 1,030,900 MT for 2013-14, which was well above expectations. Weekly sales of 78,500 MT were reported for 2012-13.
  • Gulf soybean basis is unchanged in late-morning trade after being 25 cents stronger for first-half August delivery and unchanged for last-half August through first-half September.

 

SRW wheat futures are mostly 9 to 12 cents lower, with HRW 4 to 10 cents lower and HRS futures are 1 to 5 cents lower.

  • Spillover selling from corn and soybean futures along with a a sharply higher dollar continue to press wheat futures lower.
  • Traders are ignoring positive demand news. This morning's weekly wheat export sales report showed sales of 596,900 MT, which was within expectations. China topped the buyer's list as some previous sales were switched from unknown destinations. In addition, export sources say Brazil has purchased around 400,000 MT of U.S. HRW wheat and is shopping for more to fill in needs due to crop concerns and a shortage of Argentine exports.
  • However, Ukraine's ag ministry forecasts a record-large grain crop this year and wheat exports are expected at 9 MMT. This wheat usually moves into export channels at prices below U.S. prices.
  • In addition the International Grains Council today trimmed its estimated of total global carryover stocks by 5 MMT due to increased consumption as it increased its estimate of total global wheat production 1 MMT versus a year earlier.
  • Traders continue to view weather forecasts as positive for the spring wheat crop, which is adding to selling interest in HRS futures.
  • Gulf SRW basis in 1 cent higher for immediate delivery in late-morning trade and unchanged for other delivery periods.

 

Live cattle futures are mostly lower while feeder cattle futures are continue to trade higher.

  • Live cattle futures are slightly lower in light price action as a few cash bids trickle through the market place.
  • A few reports of cattle moving at $1.19 in Texas and Kansas have surfaced but market observers maintain most feedlot owners continue to hold out for higher bids.
  • The August contract is seeing some light pressure as it holds a premium to the $1.19 price.
  • Boxed beef trade continues to give mixed signals to traders. Choice boxes are down 16 cents this morning while Select is up 28 cents. Movement was 107 loads.
  • The selloff in grain futures has feeder cattle futures trading higher, though weakness in live cattle and futures' premium to the cash index is limiting gains.

 

Lean hog futures are higher through the April contract, while far-deferred contracts are under pressure.

  • Some positive signs from the wholesale pork market are lifting the front-month contract.
  • The pork cutout value rose yesterday and movement was positive. The cutout this mornings is slightly weaker, but movement is still strong at 216.3 loads.
  • Traders continue to look for the seasonal rise in hog supplies, hog weights and weakness in wholesale prices. In addition, they view declining grain prices as bearish for farther deferred futures contracts. This attitude is limiting buying interest to short-covering.
  • August hogs are seeing some buying support from its discount to the cash index.
  • Negative chart formations in deferred futures are limiting buying interest in those contracts.
     
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